Although the financial crisis is behind us, rates of foreclosures continue to be high. If you are at risk of foreclosure, you are likely feel very confused. However, you could consider a loan reinstatement (forbearance agreement), something that experts like Stephen R Buzzi can help with, and thereby keep your home.
What Is a Loan Reinstatement (Forbearance Agreement)?
In this case, you will pay a large sum of money that instantly brings your mortgage back up to current. This sum must include missed payments, late charges, and attorney fees. If you do not have this amount, but only have between 30% to 50% of it, as well as a payment plan, it may also be accepted. A loan reinstatement relating to a forbearance agreement means that this lump sum is effectively added to the term of your mortgage, which means, on the face of it, you simply extend the repayment period of your mortgage.
Advantages of a Loan Reinstatement Arrangement
- The legal process will be stopped.
- You avoid foreclosure.
- You can return to making normal mortgage payments.
- You will no longer be hassled by your lender.
- It is quick and efficient, as well as being advantageous to the bank.
- It is not as expensive as other options, although this depends on how you get the lump sum together.
Disadvantages of a Loan Reinstatement Arrangement
- You have to show that you are able to pay the money you owe.
- A bank will probably need you to come up with the lump sum through means other than another loan.
- You must demonstrate that you can pay your mortgage – as well as the loan if you took one out – meaning you have to go through the full process of having your credit checked again.
- If things go wrong, you will end up with even more debt, and an even worse credit.
- If you default, your foreclosure will go ahead even if you have made partial payments.
- It is a last resort option and any payment arears will look very bad on you.
As you can see, there are pros and cons to this option. Remember, as well, that the foreclosure process will only be paused, not reversed, if you come to this agreement. Only once all money owed (missed payments, penalties, fees, charges, etc.) has been paid will that happen, which can easily take as long as two years. One tiny little mistake in the meantime and the process will simply continue from where it had gotten to. However, not taking this option may mean that your property will definitely be foreclosed. Hence, you really have to consider the pros and cons so that you can decide which option works best for you. Sometimes, it is better to cut your losses and go for a short sale than to try to find a way out where there is none. Do speak to experts like Stephen Buzzi, who will be more than happy to advise you on the best ways forward.